One-size solar doesn't fit every state

One-size solar doesn't fit every state

BY BILL JOHNSON

RALEIGH - Our nation is entering a period of transformational change in how we produce and use energy. Renewable energy sources, such as solar, wind and biomass, will generate an increasing share of our electricity in the years ahead. But North Carolinians should be concerned about proposals in Congress that would force this transition without careful consideration of the cost -- potentially more than $200 per year per household -- or a full understanding of what's truly available and achievable in our region.

These blind spots are particularly troublesome with many consumers struggling to make ends meet. And they illustrate why it is important that every customer dollar invested to address climate change go directly toward achieving the real goal: getting the greatest carbon dioxide (CO {-2}) emission reduction with the least impact on consumers.

In 2007, the General Assembly adopted a renewable energy policy for the state, requiring that by 2021, 12.5 percent of our energy sales must come from renewable sources and energy efficiency. We were proponents of this bill, which is the only renewable energy law in the Southeast, and worked with the environmental community and others to help get it adopted. The initial stages of the requirement begin next year.

The 12.5 percent requirement was based on an independent study of the availability of renewable resources in our state, completed by La Capra Associates, and the law includes a price cap to protect consumers. We fully supported this legislation, and we're working hard to implement it in the most cost-effective way.

We've been scouring the market to find renewable energy resources. We've signed contracts with three solar plants and with biofuel facilities. But what we have found is that renewable energy in North Carolina is far from plentiful and cheap. Compared with the initial estimates from the independent study, there is about one-third the capacity available in our state at three to four times the anticipated cost.

Renewable resources vary widely around the country, which means the costs and benefits of implementing a federal policy would be vastly different here from those in Texas, where wind and solar opportunities are abundant. In the Southeast, there are limited renewable options due to our climate and geography, and what is available (mostly biomass) is expensive.

Even the La Capra study concluded that North Carolina "would have difficulty" achieving 10 percent renewable energy generation, and meeting such a target would require an extensive

investment in offshore wind power. That's why the state law provided for a large percentage of the total requirement to come from energy efficiency. Of the 12.5 percent state goal, about 7.5 percent will come from renewable energy and 5 percent from efficiency by 2021. That is a reasonable approach based on facts.

Now, elected officials in Washington are looking at a national one-size-fits-all requirement for renewable energy. These proposals would require that 20 percent to 25 percent of the energy we provide to our customers come from renewable energy sources within a very short period -- two to three times what the study cited as realistically and economically achievable.

These federal proposals would compel Progress Energy customers to pay higher rates to subsidize renewable energy in other regions or to fund alternative compliance payments to the federal government for renewable energy requirements that can't be met here.

For our customers, whose median household incomes are 11 percent below the national average, electricity prices would rise by 10 percent to 15 percent -- $140 to $230 per year for the average household -- to comply with the federal renewable energy laws being considered. That does not include the additional costs that will come with climate change legislation. And because our customers' dollars would be sent out of state for renewable energy or to the federal government, their higher electric bills would do little to reduce local carbon emissions or produce jobs here.

Supporters claim that a federal renewable energy standard will create jobs, reduce CO {-2} and increase our energy security -- all worthy objectives that Progress Energy fully supports. But a one-size-fits-all standard is not the most equitable or cost-effective way to achieve a clean energy future and stimulate the economy.

Rather than a national renewable mandate, we should establish a greenhouse gas emissions cap and give states and utilities greater flexibility to meet the cap in a manner that reflects regional differences and makes the most sense for their citizens and customers.

Such an approach would reduce carbon emissions at a lower cost, while promoting a more reliable energy supply and more robust job creation. That's the goal Congress should be working toward.

Bill Johnson is chairman, president and CEO of Raleigh-based Progress Energy, which serves 3.1 million households and businesses in the Carolinas and Florida.